[skywalk]

"Bigness" matters because only a few of the large banks are primary dealers [1] - they directly play a role in US treasury auctions. All the other investment banks that aren't primary dealers only play a part in the secondary market. Part of this relationship is also the agreement that large banks are always making markets [2] and providing liquidity for highly-traded Fixed Income products - without someone to make the markets, no one would be able to trade. A large part of the global finance system is based on the ability to easily buy or sell these products, from the huge institutional clients like Fidelity, to the individual investor using their Schwab account (albeit even that is done through a much larger entity to access the market). The move towards computerization in the financial industry over the past 30 years has directly impacted the bottom line of these large banks (via smaller bid/ask spreads [3]), but has also directly lead to increased liquidity due to trading volume.

[1] http://en.wikipedia.org/wiki/Primary_dealer [2] http://en.wikipedia.org/wiki/Market_maker [3] http://en.wikipedia.org/wiki/Bid-offer_spread